If an American citizen is going
through financial troubles then he or she can be sure that under the right
circumstances the US government is going to be there to support them through
the Social Security scheme. This scheme is a generally used
term for the omnipotent Old-Age, Survivors, and Disability Insurance (OASDI)
which is a federal program that is managed and administered by Social Security
Administration or the SSA. This scheme came into being when the Social Security
Act was signed by then US President Franklin Roosevelt in the year 1935. From
its conception till now, the Social Security scheme has
undergone a number of changes and amends to fit the need of the contemporary
population. Its present form includes a number of social welfare as well as
other social insurance programmes.

How is Social Security funded?
The US government cannot operate to
finance the Social Security programme on its own accord and
requires the financial support of the American citizens. The scheme gets basic
funding through the payroll taxes which are known as the Federal Insurance
Contributions Act tax (FICA) or the Self Employed Contributions Act Tax (SECA).
These tax deposits are then collected by US’ Internal Revenue Service (IRS). Once
the taxes are accumulated, they get transferred to the Trust Fund of the
Federal Old-Age and Survivors Insurance along with the Federal Disability
Insurance Trust Fund; these are the two primary Social Security Trust Funds.
Mostly all the American citizens,
barring few exceptional cases, with the salaried income are supposed to pay
into the Social Security payroll taxes. The taxes are
dependent on a tax slab or tax rate table and the specific amount is dependent
on the relevant laws. Based on the data present in 2018, the maximum amount of
tax that could be levied was $128,400. The record of these taxes and other
benefits are stored and managed using the Social Security Number which each and
every legal American resident is entrusted with and this number has been given
to most of the people since 1935 when Social Security was
introduced. This unique identification number plays a major role in the lives
of US citizens as it is required by them for a wide range of businesses and to
get benefits from serviced – both government and private.
Must Read:Social Security Meaning and Interpretation in simple terms
Must Read:Social Security Meaning and Interpretation in simple terms
Major programs under Social Security
The Social Security scheme
does not contain just a single programme of the scheme but is made of a number
of varied plans that encompass a large area to positively affect as many
American citizens as possible and who have their own Social Security numbers.
The major programmed under this scheme are –
· Federal Old-Age
(Retirement), Survivors, and Disability Insurance or the OASDI – it
is a comprehensive federal program that caters to the needs of the retirees,
the disabled people and the family that survive them. This programme helps to
partially supplement or replace the income that maybe is lost as a result of
old age, the demise of a spouse or disability.
·
Temporary
Assistance for Needy Families or better
known as TANF
·
Health Insurance
for Aged and Disabled or
the Medicare – it is a programme which is federally funded and
is administered by Centres for Medicare & Medicaid Services or the CMS, it
is basically America’s health insurance programme. For a person to be eligible
for it, one has to be at least 65 or older than this, must be the recipient of
Social Security Disability benefits or have some disabilities or even permanent
renal/kidney failure (in this case the person can be under the age of 65)
· Grants to States
for Medical Assistance Programs for
low-income citizens or the Medicaid – it is jointly operated
by federal and state governments and is meant to help cover the medical costs
for people who have limited resources or income. It also includes services like
nursing home and personal care service. As of the data available in 2017, it has been providing health insurance free of cost to 74
million people with low income and also the disabled people.
· State Children's
Health Insurance Program for
low-income citizens or the SCHIP –it is operated as a
partnership among federal and state governments to provide the health coverage
at a low cost to those children whose family income is less but too much to be
eligible for Medicaid. The basic coverage under this programme includes routine
medical check-ups, mandatory immunisation, visit by a doctor and also
prescriptions whenever needed.
· Supplemental
Security Income or the SSI – it is
funded federally and is administered by the Social Security Administration; it
is designed to provide financial support to disabled children and adults who
may not have sufficient income or assets to support them. Some of the basic
requirements to qualify for this scheme are that the person should be a legal
US citizen, be visually impaired or disabled and have limited income/resources,
etc.
How the Taxes are levied on wages and self-employment income?
Apart from deriving the funds
for Social Security scheme via the taxes levied on salaried
Americans, these are also paid by the wages earned by the employees as well as
the self-employed people. The employer and the employee have to contribute
towards the payment of one-half of the Social Security tax
wherein half of the amount is withheld from paycheque of the employee. The
amount of tax which is collected from the employee is referred to as the
"trust fund taxes", the employer is supposed to remit this to the US
government. If the person is self-employed then he or she has to contribute the
whole amount of the tax.
Must Read: A Quick Guide On How To Achieve Success In The SSD Application Process!
Must Read: A Quick Guide On How To Achieve Success In The SSD Application Process!
Current Status of Social Security
The data on Social
Security presented in the year 2015 projected that the expenditure
under this scheme came to $750.5 billion for the OASDI and was $146.6 billion
for the DI. The data has revealed that the funds that have gone into this
scheme has successfully been able to reduce the rate of poverty for the
American citizens who are 65 years old or even older and the rate was lowered
from 40 percent to below 10 percent. But in the year 2018, the trustees
of Social Security estimated that the programme will probably
go through financial insolvency by the year 2034. Hence, the future of this
scheme is quite uncertain, still, until it is present, a number of Americans
can be hopeful to enjoy at least a bit of financial support.